Sony 2006 Annual Report Download - page 44

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Corporate Governance/New Directors and Corporate Executive Officers
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Sony is committed to strong corporate governance. As part of
such efforts, Sony adopted a “Company with Committees”
corporate governance system under the Japanese
Company Law. In addition to complying with the requirements
of laws and regulations, Sony also has introduced its own
mechanisms to help make its governance system even more
sound and transparent, including strengthening the separation
of the Director’s function from that of management and
advancing the proper functioning of the statutory committees.
Under this system, the Board of Directors defines the respective
areas for which each Corporate Executive Officer is responsible
and delegates to them decision-making authority to manage
the business, thereby promoting the prompt and efficient
management of the Sony Group.
Governance Structure
Sony Corporation’s statutory bodies comprise the Board of
Directors, three committees (the Nominating Committee, Audit
Committee and Compensation Committee) and the Corporate
Executive Officers. In addition to these statutory bodies, Sony has
Corporate Executives who carry out business operations within
designated areas.
Primary Roles of the Bodies
Board of Directors:
•Determines the fundamental management policies of the Sony
Group
•Oversees the management of the Sony Group’s business
operations
•Appoints and dismisses the statutory committee members
•Appoints and dismisses Corporate Executive Officers
Nominating Committee:
•Determines the content of proposals regarding the appointment/
dismissal of Directors
Audit Committee:
•Audits the performance of duties by Directors and Corporate
Executive Officers (with regard to preparation process of
financial statements, disclosure controls and procedures,
internal controls, compliance structure, risk management
structure, internal audit structure, internal hotline system and
other matters)
•Determines the content of proposals regarding the appointment/
dismissal of, approves the compensation of, and oversees and
evaluates the work of Sony’s independent auditors
Compensation Committee:
•Determines compensation for individual Directors, Corporate
Executive Officers, Corporate Executives and Group Executives
Corporate Executive Officers:
•Make decisions regarding the execution of Sony Group business
activities within the scope of the authority delegated to them by
the Board of Directors
Corporate Executives:
•Carry out business operations within designated areas, including
business units, research and development and/or headquarters
functions, in accordance with the fundamental policies determined
by the Board of Directors and the Corporate Executive Officers
Sony Initiatives
To strengthen its governance structure beyond legal requirements,
Sony Corporation has added several provisions to its Charter of the
Board of Directors to ensure the separation of the Board of Directors
from the execution of business, and to advance the proper
functioning of the statutory committees. The main provisions are as
follows:
•Separating the roles of the Board chairperson/vice chairperson
and Representative Corporate Executive Officers
•Limiting the number of terms outside Directors may serve and
rotating committee memberships
•Appointing chairs of statutory committees from the ranks of
outside Directors
•Setting forth qualifications for Directors for the purpose of
eliminating conflicts of interest and ensuring independence
•Raising the minimum number of Nominating Committee
members (five or more)
•Prohibiting the appointment of the CEO or COO of the Sony
Group (or person at any equivalent position) to the Compensation
Committee
•Discouraging the concurrent appointment of Audit Committee
members to other committees
•At least two Directors of the Nominating Committee shall be
Corporate Executive Officers
•As a general rule, at least one Director of the Compensation
Committee shall be a Corporate Executive Officer
Meeting Record
During the fiscal year ended March 31, 2006 (fiscal year 2005), the
Board of Directors convened eight times. The Nominating Committee
met five times, the Audit Committee 11 times and the Compensation
Committee seven times. In fiscal year 2005, each incumbent
Director attended at least 75% of the aggregate number of
meetings of the Board and Committees on which he/she served
(during the period that he/she served).
Cooperation of the Audit Committee and the
Internal Audit Division
Sony Corporation has an internal audit division, which coordinates
with the internal audit departments of major subsidiaries around
the world to promote Sony Group’s internal audit activities on a
global basis. The Sony Corporation internal audit division makes
periodic presentations to the Audit Committee (in fiscal year 2005,
five times) and submits monthly reports to the Audit Committee. To
help assure its independence, the appointment and dismissal of
the person in charge of the Sony Corporation internal audit division
is subject to the prior approval of the Audit Committee.
(Reference)
For an explanation as to the significant differences between the
New York Stock Exchange’s corporate governance standards and
Sony’s corporate governance practices, please visit us on the
Internet at:
http://www.sony.net/SonyInfo/IR/NYSEGovernance.html